How to Refinance: Getting a Good Faith Estimate

by Sheryl Landrum
CMR Columnist

Make sure you work with a reputable lender and talk to more than one loan officer when considering how to refinance your home loan. Then, to make sure you are comparing similar mortgage loan programs, get a good faith estimate (GFE) and a truth-in-lending disclosure from your lenders.

Your good faith estimate is an approximation of the costs involved with your mortgage refinance. It will include any origination fees (also known as points), interest rate buy-downs (also known as discount fees), and lender fees which may include underwriting, processing, credit, wire, and tax service fees. Your GFE will also break down title and escrow fees, appraisal fees, pre-paid interest, and impound reserve requirements. Your truth-in-lending disclosure will provide the interest rate and terms of the home loan, as well as any pre-payment penalties. With these two documents, you should be able to determine how to refinance your mortgage loan in the best way.

Unfortunately, too often borrowers think that they are getting one mortgage loan when in fact they are getting another. Surprises when signing home loan documents, such as pre-payment penalties, origination points, and higher interest rates are especially problematic when initiating a home purchase. To lessen the chance of any surprises when closing escrow, ask for a GFE and a truth-in-lending disclosure from your lender to ensure you are getting the best deal and the right home loan for you.

About the Author
Sheryl Landrum is a Senior Loan Officer with Charter Funding, Inc. in Carlsbad, California and a freelance writer specializing in mortgage issues

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